Newsletter - May 2026

Last week, we also had our annual Staff Conference. This year, we took the opportunity to visit a couple of clients and hear about their businesses and what they expect from their professional advisors who work as part of their team. We also spent some time discussing how we can provide value beyond the numbers to our clients.

You may have also read last week about Craig’s purchase of phwealth. There is some more information below about the background to this and what it means going forward.

Enjoy the newsletter and as always if you have any questions just ask.
 

Mike

In this Newsletter

• New Manager – Sophie O’Connell
• New Assistant Manager – Katie Duncan
• New Senior Payroll Administrator – Tracey Walter
• phwealth Update
• Fuel Costs and Motor Vehicle Reimbursements Rates
• 7 May Final Provisional Tax Instalment for March Balance Dates
• New Tax Legislation – Employee v Contractor
• Business South Endorsed
• Terms and Conditions
   

New Manager - Sophie O'Connell

Polson Higgs is pleased to announce the promotion of Sophie O’Connell to Manager, recognising her continued development and contribution within the firm. Originally from sunny Nelson, Sophie moved to Dunedin in 2015 to study at the University of Otago. Once Sophie began her studies it quickly became clear that accounting was the career path she wanted to pursue. After graduating with a Bachelor of Commerce majoring in Accounting Sophie began her career working full time at Polson Higgs in 2019 under the Graduate Accounting Programme.

Jamie Reidie, Polson Higgs Partner described Sophie’s attitude towards work as “dedicated, enthusiastic and with a strong focus on delivering value and showing genuine care for our clients.” Sophie progressed within the firm becoming a Chartered Accountant in 2022 and stepped into the role of Assistant Manager the following year. Her promotion to Manager is a clear reflection of both her technical capability and her commitment to delivering quality outcomes for clients.

Sophie credits the positive work environment at Polson Higgs for giving her the opportunity to work across a wide range of industries within a supportive team. In her new role as Manager, Sophie is looking forward to continuing to grow, developing her skills and taking on the challenges that come her way.

Outside of work, Sophie enjoys spending her time outdoors, making the most out of what Dunedin has on offer. In her spare time, Sophie can be found mountain biking or heading out for walks with her partner Dan and their dog. When she can, she also enjoys getting back up to her home in Nelson and spending some quality time with her family.
 

New Assistant Manager - Katie Duncan

Katie’s promotion from Senior Accountant to Assistant Manager reflects her professional journey through strong foundations at Polson Higgs and valuable overseas experience. Originally from Dunedin, Katie decided to stay put and study in her hometown at the University of Otago. Katie completed her studies in 2019 graduating with a Bachelor of Commerce in Accounting and Finance. She joined the Polson Higgs team in 2020 beginning her professional career as a Graduate Accountant.

In 2023 Katie took the opportunity to move overseas to London where she continued working as an accountant across a range of roles and industries. During her time abroad she gained valuable experience working as an in-house Finance Manager for a television production company, a private property group and a renewable energy company. This exposure allowed Katie to broaden her skill set and gain insight into a wide range of environments.

Katie returned to Polson Higgs in late 2025 and has since continued to build on her experience and client relationships. Polson Higgs Partner David Hogue said “we really enjoy having Katie as part of the Polson Higgs team. She has great problem-solving skills developed from her range of experience. If there is a complex problem or client issue, Katie is someone we know who can help provide the solution.”

Outside of work, Katie admits she has a bit of a habit of picking up new hobbies, even if she doesn’t always master them. Now that she is back in New Zealand, she is looking forward to exploring more of the country. She plans to tick skiing, hiking and boating off the list first.
 

New Senior Payroll Administrator - Tracey Walter

Tracey Walter’s appointment as Senior Payroll Administrator recognises her strong practical experience, dedication to her role, and the valuable contribution she makes to the Polson Higgs Payroll team.

Tracey has long enjoyed accounting and economics, so she decided to follow her instincts. She has worked in office environments throughout her career, building hands-on experience across a variety of roles and industries. Tracey began her professional journey in a real estate office, before moving to property management where she discovered a particular interest in the accounting and trust side of the business. This led her into finance-focused roles, allowing her to further develop her skills and knowledge in this area.

Tracey joined Polson Higgs in 2023, starting in a finance administration role. Always keen to stay busy and challenged, she soon took up an opportunity to move into Payroll, where she has since become a key part of the team. Her promotion to Senior Payroll Administrator reflects both her expertise and the integral role she plays within the firm.

Outside of work, Tracey enjoys spending time with her family and relaxing at home. She can often be found trying out new recipes in the kitchen, reading a good book or working on her latest knitting project.
 

phwealth Update

You may have recently seen some news that phwealth has been sold to Craigs Investment Partners. We understand that such news can sometimes raise questions, so we wanted to provide a little background and be clear that this transaction was not initiated by, nor was it a decision of, Polson Higgs.

phwealth originally started as a division of Polson Higgs. This began out of a desire to fulfil a need for investment services for clients once businesses and farms had been sold. In 2007 the business was transferred to a separate company, Polson Higgs Wealth Management Limited, owned by the partners of Polson Higgs. The business operated as a separate entity from this point, while still having a close relationship with Polson Higgs.

Between 2020 and 2025 Polson Higgs itself went through its own changes. Carole, Jamie, Ryan and David joined the firm with Tim, Steve and Henry retiring. phwealth was not part of this transition.

Although we would have preferred that ownership remain local, the decision rightly sat with the owners of phwealth. As business owners themselves, they were fully entitled to make that choice based on their own circumstances and objectives, and we respect their right to do so.

Importantly, for the time being phwealth will continue to operate from the same building, in its same location. Meetings with Jared, Rhodes and the team will continue as they always have and we expect that they will provide the same level of care and expertise that we would expect.

If you have any questions or would like to discuss this update further, please contact the partner you deal with.
 

Fuel Costs and Motor Vehicle Reimbursement Rates

The significant recent increase in fuel prices have seen a number of employers consider the rate they reimburse staff at for business use of their vehicle.

Generally, employers can provide a tax‑exempt reimbursement for motor vehicle expenses incurred by employees while using their personal vehicle for work (i.e. travel required by the employee’s employment duties). This does not normally include home to work travel.

There are generally three accepted methods for calculating a tax‑exempt reimbursement of motor vehicle costs.

1. Actual costs
Some employers might reimburse the actual costs incurred in using the motor vehicle for business purposes. This method is most precise but also the most compliance heavy, as it requires records to support the costs of every business trip.

2. IRD kilometre rates
Inland Revenue permits employers to use the annual kilometre rates set out in OS 19/04 as a “reasonable estimate” of motor vehicle costs. This approach offers a simple, low‑compliance option and is commonly used in practice.

The main limitation is that the IRD kilometre rates are set annually and do not adjust for cost fluctuations during the year such as significant changes in fuel prices. While most employers have historically used this method in recent times these rates suddenly look less than generous.

3. Reasonable estimate
Alternatively, an employer may make a reasonable estimate of motor vehicle costs. This option provides greater flexibility within the existing tax rules. For example, where fuel costs have increased materially, it may be reasonable to apply a reimbursement rate higher than the current IRD kilometre rate to reflect those increased costs.

Provided the estimate is reasonable and defensible, reimbursements calculated under this approach are generally tax‑exempt to the employee.

Each business must exercise judgement in determining what is “reasonable” and ensure the methodology can be justified to Inland Revenue. We recommend that employers do a sample of employee costs and document this in arriving at a reasonable estimate. Importantly, the reimbursement rate should be reviewed regularly so that it continues to reflect future price movements and remains a reasonable estimate of actual costs.

7 May Final Provisional Tax Instalment for March Balance Dates

Now that the end of the financial year is behind us for March balance dates, our focus turns to the final provisional tax instalment for the 2026 financial year, which for standard balance date clients is due on 7 May. Getting this payment right is crucial to ensure IRD use of money interest does not apply on any underpayments.

For taxpayers with a residual income tax (RIT) of less than $60,000, and who use the standard uplift method to calculate provisional tax, a safe harbour applies and use of money interest will only be payable from the terminal tax date (generally 7 April 2027) for any underpayments of provisional tax. A Taxpayers RIT is their tax liability for the year less tax deducted at source (eg PAYE or RWT).

For those with residual income tax of greater than $60,000 and who calculate provisional tax using the standard uplift method, use of money interest will apply from the final instalment date provided the first two payments were made in full and on time. Given the length of time between the final provisional tax payment and your terminal tax payment, interest can become significant. This is currently at 8.97%.

To mitigate the interest risk, now is the time to consider how this year’s trading has gone. Where it is looking likely that your 2026 tax bill will be higher than last years, or the provisional tax you were due to pay,  you may want to look at making a voluntary payment to reduce your exposure to use of money interest. Where trading is down some options exist to reduce the 7 May payment. The interest implications here a little tricky. Luckily the team are here to help if this applies to you.
 

New Tax Legislation - Employee v Contractor

The recent Supreme Court Case involving Uber determined that a group of their drivers were employees’ and not independent contractors. As a result “specified contractors”, a class of workers, were excluded from the definition of employee under newly introduced employment legislation.

Being deemed a specified contractor means passing the gateway test. At a high level this means having a significant level of control over how and when you work, plus a written agreement that you are an independent contractor.

Tax law relied on the old common law test to distinguish contractor from employee being contract for services versus a contract of services. This new change meant a mismatch was created between employment and tax law.

To rectify this, amendments have been made in tax law to ensure that when a worker is not an employee and instead working under a contract for services (as a specified contractor) under employment law they would keep the same status for tax.

This means if you are a specified contractor, for tax you will have the status of a contractor for income tax, GST and KiwiSaver. Certain industries have withholding obligations even for contractors and, being a specified contractor will not exempt you from these.

For some people however, where the distinction between being an employee and a contractor is difficult and this new ability to determine the position by agreement may be beneficial.
 

Business South Endorsed

If you follow us on social media or have been in touch with our team recently, you may have seen that Polson Higgs has officially become Business South Endorsed – and we’re proud to be just the second business to have achieved this recognition.

This endorsement recognises our commitment to professionalism, strong values and business excellence across Otago and Southland. It reflects the quality systems, processes and client relationships we prioritise daily.
 

Terms and Conditions

As we generally do at the start of the financial year we have updated our standard terms and conditions. You can read them here.

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